Cournot game with incomplete information based on rank-dependent utility theory under a fuzzy environment

Abstract

In most existing literatures on Cournot game, game behaviour between players is based on the hypothesis that people are complete rationality. However, players’ decisions are often affected by their behavioural characteristic and psychology preference. Traditional Cournot model also doesn’t deal with ambiguous information. Based on rank-dependent utility theory, this paper develops an incomplete information Cournot game in an ambiguous decision environment, where the form of ambiguity is described by a set of fuzzy parameters, and behavioural pattern is reflected by means of emotional function in rank-dependent utility. Further, we investigate the Nash equilibrium quantity of each manufacture in this kind of fuzzy Cournot game with incomplete information. Finally, the proposed Cournot model is applied to a case study, and dynamic variation and sensitivity analysis of optimal quantity with respect to decision-maker’s behaviour pattern are discussed in detailed, which illustrates that the proposed Cournot model is more reasonable than traditional Cournot model.

Keywords:

• Cournot game
• incomplete information
• rank-dependent utility
• fuzzy variable
• fuzzy equilibrium

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was partly supported by the Funds for Creative Research Groups of China [number 71221061]; the projects of major international cooperation NSFC [number 71210003]; the National Natural Science Foundation of China [number 71271217], [number 71571192]; the Program for New Century Excellent Talents in University of China [number NCET-12-0541]; Research Fund for Innovation-driven Plan of Central South University [2015CX010].